The Personal Finance Misconceptions You Probably Believe

If you spend some time thinking about it, then money is pretty odd. We all want it, we’ve assigned a value to it, and a lot of us base our lives on how much we have. What’s even stranger about money is that it has such an impact on our lives, yet most of us only have a vague understanding of how we can become financially stable. There are a lot of misconceptions about money, which might end up hurting you in the long if you continue to believe it. Below, we burst some of the money bubbles that have been allowed to grow for too long.

You’re Saving Enough

If you’re saving whatever amount you think you can afford – or want to save – each month, and you haven’t been reading any more on the subject, then you’re probably not saving as much as you need to, for two reasons. The first is that the holiday you’ve been saving up for is just one expensive incident – such as having to get your boiler fixed – from not coming true. The second is that retirement is a lot more expensive than most people realise. Up your savings game: there’s nothing bad that can come from it.

You’re Tapping All Your Resources

People tend to get a job with a salary, and then make do with whatever figure that is. But here’s the thing: you don’t have to settle for only one income. Most people have the option to give their salary a top up by finding a second income. An extra room in your house, for instance, could bring in thousands of dollars each year. Selling your old gear could add $200 a month. Or you could teach your talent to other people. There are always ways to make more money – don’t let those valuable resources go untapped!

Any Money That’s Not Yours Is Bad

If you have an income and can comfortably live within those means each month, then that’s a good thing. But that doesn’t mean that any money you spend that isn’t your own is automatically bad. A payday loan, for instance, is a good option if the alternative is even more complicated financial issues, as Personal Money Store demonstrates. It’s all about good debt versus bad debt. A bad debt would be, say, taking a large loan out and then spending it all on a two-week vacation. A good debt would be taking the same money and using it to take a professional course, for instance. If the result of the loan will be a positive long-term impact on your life, then it’s a good idea.

Your Salary Will Cover Everything

It really doesn’t matter how much money you’re earning: your salary will not automatically see you through for the rest of your life. It may cover your needs, wants, and luxuries, but to have a sound financial future, you need to make sure that you’re putting some of your money aside for investments. Opt for the steady and stable options, and you’ll always have a return on your investment.

Security is Around the Corner

One of the biggest mistakes people make is believing that their financial security lives just around the corner. It doesn’t, or it won’t unless you’re taking steps that’ll eventually lead that way. There is no magic bullet when it comes to money: you get out what you put in. If you’re in debt, then begin working on a plan to eventually be debt free today, not tomorrow. If you’re worried about your retirement, then get saving more money – as soon as possible.

Lifestyle Inflation

Let’s say you have a job that pays $40,000. You live a $35,000 a year lifestyle. When your salary raises by a quarter, you should be excited about the extra financial security that would be wrong. What usually happens is that people tend to inflate their lifestyle to whatever money they’re earning. It’s best to ignore your salary: what’s important is how much money you’re saving. A million dollar a year salary doesn’t mean anything for your future if you’re also spending a million dollars a year.

You Need as Much Money As Possible

Finally, remember this: you really do not need to spend your entire life acquiring as much money as possible. It would be pointless, and here’s why: there’ll come the point – it’s about $75,000 a year – when the money to happiness ratio begins to taper off. If you hit that figure, then work on keeping that figure, and live a happy life.